DNR approves land deal with Stemilt

The state Department of Natural Resources has approved a deal to buy orchard from Stemilt Growers Inc. and then lease it back to the company while selling it equipment at other orchards.

OLYMPIA, Wash. — A land and equipment transaction between Stemilt Growers Inc., the state’s largest tree fruit company, and the state Department of Natural Resources, has been approved by the department’s board.

DNR will buy 1,182 acres — 817 of it of irrigated orchard — 15 miles northeast of Pasco, near Ice Harbor Dam, from Stemilt for $7.6 million. The purchase includes water rights and an irrigation system. DNR will then lease the orchard to Stemilt, a Wenatchee company, for continued orchard operations for $387,814 annually with the revenue supporting statewide public school construction, according DNR materials.

DNR will sell irrigation equipment, irrigation and electrical systems, trellises and wind machines at two other orchards to Stemilt for $11.1 million, said Bob Redling, DNR spokesman. Stemilt has been leasing those orchards from DNR and will continue to do so to grow fruit, he said. One is 592 acres on Page Road in Franklin County and the other is 713 acres about 6 miles southeast of Mattawa in Grant County, Redling said.

Leases will change from crop share to a flat amount for less risk and better certainty of income through DNR for school districts and Washington State University, Redling said.

“DNR adds good irrigated orchard land to its portfolio for the school trust with certainty of revenue and is selling equipment that needed improvement,” he said.

Stemilt is repositioning assets for the future and may have tax or corporate structural reasons for the deal, Redling said.

The Ice Harbor property has low property taxes under an agricultural designation but will become state exempt with a compensating annual leasehold tax and the difference between the ag and fair market taxes due for seven years back, Redling said. He said he did not have the amounts and didn’t know if DNR or Stemilt will pay them. Like any land deal, it can be negotiated either way, he said.

West Mathison, president of Stemilt, said the deal gives Stemilt greater flexibility to replant the orchard. He said Stemilt sold land adjacent to the orchard near Ice Harbor Dam, creating a larger amount under the same ownership and lease structure.